According to research by the National Association of REALTORS, buyers habits are changing when it comes to real estate. The report, recently released by NAR, asked more than 100,000 consumers to rank the usefulness of information sources to their efforts to learn more about the marketplace. The good news was that for the first time in years, the real estate agent edged-out the internet for top-spot as “very useful” (81% vs 77%). The bad news is that, by a factor of 4, most buyers think open houses suck.
Within the margin of error, the agent-vs-internet top-spot is essentially a tie. That’s good, because the agent-as-most-useful had been on a steady decline for the last decade. Landing on-par with the internet is mostly good news, depending upon how you interpret it. On one hand, it could mean that today’s agents are providing excellent information and service when buyers contact them. On the other hand, it could mean that REALTORS have been putting steadily worse information online, to the point that the consumer feels their online listing content is so poor, they might as well just contact the agent (and get it over with).
That would be unfortunate.
If we compare the data year-over-year, some of the results seem ponderously unchanged. For example, the 2008 survey indicated that 46% of buyers felt yard signs were “very useful” compared to 42% in the 2009 survey: considering the data margin, it seems strange that usefulness of yard signs in the era of foreclosures-on-every-corner remained about the same. Not to mention most yard signs today still don’t feature text-message options to attract and inform Gen Y buyers.
Makes you wonder.
Then there’s the surge in usefulness in two categories that is noteworthy: Billboards went from near-bottom 9th rank to 4th ranked usefulness this year. So did television, which was in the last spot in 2008, but earned the middle spot this year. Most observers would think we’d think these rises as unbelievable, since neither seems like a growing medium to reach modern consumers. But their rise is mostly due to steep falls in other categories:
- Home book magazines dropped from 27% “very useful” to 90% “not useful.”
- Newspaper ads went from 29% very useful to 98% “somewhat to not useful.”
Now if only REALTORS would show their sellers this data, they might get on with actually selling more homes and raising margins in 2010. But don’t bet on it.
The research number that worries me the most – and brings into question how agents took top-spot this year – is the data regarding the usefulness of open houses. In the 2007-2008 time period, buyers ranked open houses as “very useful” 40% of the time; They said 92% of the time they were “very to somewhat” useful. But in the last 12 month study, buyers only ranked open houses very useful 10% of the time. barely 35% of the time did buyers feel that open houses were “very to somewhat useful.”
So, basically, buyers think open houses suck.
The real estate industry should be shocked and worried. Alas, more REALTORS seem focused on how much free money it can get from Uncle Sam, to fund FHA loans, so more people can put even less of their own money down on homes they’ll be defaulting on at a soaring rate in the future. Once again, something’s rotting on the inside, while all eyes are focused elsewhere. Let’s hope nobody tells their clients – the sellers.
Why might it be that buyers find open houses so useless? The data doesn’t say, but I have a few suspicions:
- REALTORS themselves consistently badmouth open houses. Perhaps they have created a self-fulfilling situation from their own attitudes. Ask any agent what they think about open houses and you’ll find no lack of complaints. Neighbors are nosy (thus, routinely ignored). Agents have convinced themselves that consumers don’t want to be “sold,” justification for standing around saying little to nothing. And rarely do you hear the words “Would you like to make an offer?” from the mouth of the agent (nor their surrogate assistant) at these sales-less selling events.
- If they aren’t soundly ignored, then most buyers are intimidated by the open house experience. Too many agents have been taught the “Gunslinger” theory of objection handling. “Go ahead, punk. Make my day!” so they can “overcome the objection” like a quick-draw contest. Gen Y is completely freaked out by this environment, because when they grew up, everyone got a trophy! They can’t possibly out-draw Top Agent Betty Barracuda, so they rapidly walk through keeping their opinions to themselves. Even Gen X sees no reason to engage in a shootout with someone who won’t really answer their questions unless they register or sign a representation contract. There are plenty of other houses to see without the hassle, like the For Sale by Owner (ie., Bank) down the street.
- Open houses are still done on Saturdays and Sundays – because that’s when most Baby Boomer agents have free time. But Sundays aren’t free time for the typical buyer, made up of Gen X and Gen Y’ers. Their weekends are busy with personal life, kids, or simply sleeping after a 60-hour work week. Visiting houses isn’t a priority. So maybe open houses are useless because they are held on the wrong days at the wrong time. For the consumer, that is.
- Managers have no idea any of this is happening, because the last time a manager went to an open house to coach their agents was probably….. um….never. The sales event has been essentially unsupervised for years – and remains unimproved, or worse, degraded. This year’s consumer data proves it. Without proper management or coaching, agents struggling with the few modern consumers who do stop by won’t spontaneously improve their outcomes all by themselves.
It begs the question as to whether consumers would prefer visiting a car showroom to a Sunday open house.
Either real estate is a sales business, or it’s not. Either the sales event has to be convenient and conducive to the buyer’s preferences, or they won’t show up. Either the agent is going to be useful, or they will not. When four out of the top five “very useful” sources of information this year were not a human being, the industry should stop and ask why. As for the fifth most useful place buyers used to find a home – open houses – it actually had a human being present. But in less than 12 months, consumers ranked it four-times lower in usefulness than the year before.
In the mind of consumers, open houses suck. Not even a recession can account for this.